U.S. SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-QSB

(Mark One)

[x]             QUARTERLY REPORT PURSUANT SECTION 13 OR 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

               For the quarterly period ended: September 30, 1996

[ ]             TRANSITION REPORT PURSUANT SECTION 13 OF 15(D) OF THE
                         SECURITIES EXCHANGE ACT OF 1934

   For the transition period from _____________________ to __________________

                         Commission file number 0-17232

                           CAPITAL RESERVE CORPORATION
        (Exact name of small business issuer as specified in its charter)

         COLORADO                                               84-0888594
(State or other jurisdiction of                              (IRS Employer
 incorporation or organization)                            Identification No.)

           7860 EAST BERRY PLACE, SUITE 215, ENGLEWOOD, COLORADO 80111
                    (Address of principal executive offices)

                                  (303)220-5030
                           (Issuer's telephone number)

                                 NOT APPLICABLE
              (Former name, former address and former fiscal year,
                         if changed since last report)

         Check whether the issuer (1) filed all reports  required to be filed by
Section 13 or 15(d) of the  Exchange  Act during the past 12 months (or for such
shorter period that the  registrant was required to file such reports),  and (2)
has been subject to such filing  requirements  for the past 90 days.  Yes_______
No___X___

         State the number of shares  outstanding of each of the issuer's classes
of common equity, as of the last practicable date:

           546,045 SHARES OF CLASS A COMMON STOCK, NO PAR VALUE, AS OF
                               SEPTEMBER 30, 1996

Transitional Small Business Disclosure Format (check one); Yes______ No ___X___
Exhibit index on page _______                               Page 1 of ____ pages


<PAGE>







                 [Letterhead of John M. Hanson & Company, P.C.]






Board of Directors
Capital Reserve Corporation

                         INDEPENDENT ACCOUNTANTS' REPORT

         The  accompanying   consolidated   balance  sheet  of  Capital  Reserve
Corporation as of September 30, 1996, and the related consolidated statements of
operations  for the three  months and nine months ended  September  30, 1996 and
1995 and cash flows for the nine months ended  September 30, 1996 and 1995, were
not audited by us, and, accordingly, we do not express an opinion on them.

         Consistent  with the  requirements  of Item  310(b) of  Regulation  S-B
management has elected to omit substantially all of the disclosures  required by
generally  accepted  accounting  principles.  If the  omitted  disclosures  were
included  in  the  financial   statements,   they  might  influence  the  user's
conclusions about the Company's financial position,  results of operations,  and
its cash flows.  Accordingly,  these  financial  statements are not designed for
those who are not informed about such matters.


                                              /s/John M. Hanson & Company P.C.








Denver, Colorado

October 18, 1996


                                       2
<PAGE>

<TABLE>
<CAPTION>

                           CAPITAL RESERVE CORPORATION
                           CONSOLIDATED BALANCE SHEET
                               SEPTEMBER 30, 1996
                                   (Unaudited)

-------------------------------------------------------------------------------------------------------------------


                                     ASSETS
<S>                                                                             <C>                    <C>
CURRENT ASSETS
  Cash and cash equivalents                                                                            $356,699
  Accounts receivable                                                                                     5,585
  Marketable securities                                                                                 131,629
  Other current assets                                                                                    7,900
-------------------------------------------------------------------------------------------------------------------


     Total current assets                                                                               501,813

EQUIPMENT - AT COST
  Office equipment                                                              $ 85,259
  Less accumulated depreciation                                                  (32,025)                53,234
-------------------------------------------------------------------------------------------------------------------


OTHER ASSETS                                                                                             26,804
-------------------------------------------------------------------------------------------------------------------


Total assets                                                                                           $581,851


<CAPTION>

                      LIABILITIES AND STOCKHOLDERS' EQUITY
<S>                                                                           <C>                      <C>
CURRENT LIABILITIES
  Accounts payable and accrued liabilities                                                             $ 12,727
-------------------------------------------------------------------------------------------------------------------


     Total current liabilities                                                                           12,727

STOCKHOLDERS' EQUITY
  Class A common stock                                                        $3,138,102
  Class B preferred stock                                                         50,000
  Accumulated deficit                                                         (2,618,978)               569,124
-------------------------------------------------------------------------------------------------------------------


Total liabilities and stockholders' equity                                                             $581,851








            See accountants' report and notes to financial statements


                                       3

<PAGE>



<CAPTION>
                           CAPITAL RESERVE CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

-------------------------------------------------------------------------------------------------------------------


                                                     Three months ended                     Nine months ended
                                                      September 30,                         September 30,
-------------------------------------------------------------------------------------------------------------------


                                              1996               1995                1996                1995
-------------------------------------------------------------------------------------------------------------------

<S>                                          <C>                <C>                <C>                 <C>
Revenue
  Insurance residuals                        $  4,532           $  4,839            $ 13,648           $ 13,586
  Interest and dividends                          878              8,869               5,941             33,818
  Investment (losses) gains                   (17,284)              (785)             32,332              6,785
  Other                                           240                158                 945              4,842
-------------------------------------------------------------------------------------------------------------------


    Total revenues                            (11,634)            13,081              52,866             59,031

Expenses
  General and administrative                   89,150             69,053             275,974            244,377
  Interest                                          -                  -               1,294                  -
  Other                                             -                  -              12,462                  -
-------------------------------------------------------------------------------------------------------------------


    Total expenses                             89,150             69,053             289,730            244,377
-------------------------------------------------------------------------------------------------------------------


Net (loss) from continuing
 operations                                  (100,784)           (55,972)           (236,864)          (185,346)

Income (loss) from discontinued
  rental operations (Note C)<F3>              (11,135)             6,273             (13,006)             5,901
Gain on sale of building
  (Note C) <F3>                               122,042                  -             122,042                  -
-------------------------------------------------------------------------------------------------------------------


                                              110,907              6,273             109,036              5,901

Extraordinary item - gain on
    extinguishment of debt (net
    of applicable income taxes)                     -             15,539                   -             84,077
-------------------------------------------------------------------------------------------------------------------


Net income (loss)                            $ 10,123           $(34,160)          $(127,828)          $(95,368)








            See accountants' report and notes to financial statements

                                       4

<PAGE>



<CAPTION>

                           CAPITAL RESERVE CORPORATION
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (Unaudited)

-------------------------------------------------------------------------------------------------------------------


                                                     Three months ended                     Nine months ended
                                                      September 30,                         September 30,
-------------------------------------------------------------------------------------------------------------------


                                              1996               1995                1996                1995
-------------------------------------------------------------------------------------------------------------------

<S>                                          <C>               <C>                  <C>               <C>
Net (loss) per common share
  Loss from continuing
    operations                               $   (.18)         $    (.09)           $   (.42)         $    (.29)
  Income from discontinued
    operations                                    .20                .01                 .19                .01
-------------------------------------------------------------------------------------------------------------------


  Net (loss) before
    extraordinary item                            .02               (.08)               (.23)              (.28)

  Extraordinary item                                -                .02                   -                .13
-------------------------------------------------------------------------------------------------------------------


  Net income (loss)                          $    .02          $    (.06)           $   (.23)         $    (.15)


























            See accountants' report and notes to financial statements

                                       5

<PAGE>



<CAPTION>

                           CAPITAL RESERVE CORPORATION
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (Unaudited)

-------------------------------------------------------------------------------------------------------------------


Nine Months Ended September 30,                                                     1996                   1995
-------------------------------------------------------------------------------------------------------------------

<S>                                                                            <C>                     <C>
Operating activities:

  Net loss                                                                     $(127,828)              $(95,368)

  Reconciling adjustments:
    Depreciation and amortization                                                 14,591                 23,560
    Investment gains                                                             (32,332)                (6,785)
    Gain on sale of assets                                                      (122,042)                (4,673)
    Loss (gain) on extinguishment of debt                                         12,462                (84,077)

  Changes in assets and liabilities:
    Other current assets                                                          27,546                 12,295
    Accounts payable and accrued liabilities                                     (35,134)                (3,501)
-------------------------------------------------------------------------------------------------------------------


      Total adjustments                                                         (134,909)               (63,181)
-------------------------------------------------------------------------------------------------------------------


    Net cash used for operating activities                                      (262,737)              (158,549)

Investing activities:
  Investments in common stock                                                   (184,766)               (89,776)
  Sales of investments in common stock                                           174,550                 11,000
  Proceeds from sale of assets                                                   501,275                136,601
  Proceeds from other investments                                                  8,637                      -
  Purchase of property                                                           (28,564)               (66,613)
-------------------------------------------------------------------------------------------------------------------


    Net cash provided by (used for)
      investing activities                                                       471,132                 (8,788)

Financing activities:
  Payment on note payable - related party                                       (196,000)              (241,000)
  Purchase of treasury stock                                                      (2,000)                (4,000)
-------------------------------------------------------------------------------------------------------------------


    Net cash used for financing activities                                      (198,000)              (245,000)
-------------------------------------------------------------------------------------------------------------------


Net change in cash and cash equivalents                                           10,395               (412,337)
Cash and cash equivalents at beginning of period                                 346,304                844,717
-------------------------------------------------------------------------------------------------------------------


Cash and cash equivalents at end of period                                     $ 356,699               $432,380



            See accountants' report and notes to financial statements

                                        6

<PAGE>

<FN>

                           CAPITAL RESERVE CORPORATION
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                SEPTEMBER 30,1996
                                   (Unaudited)

--------------------------------------------------------------------------------


NOTE A - MANAGEMENT'S STATEMENTS

In the opinion of management,  the accompanying unaudited consolidated financial
statements  contain all  adjustments  (all of which are normal and  recurring in
nature)  necessary to present fairly the financial  position of Capital  Reserve
Corporation  as of September  30, 1996,  and the results of  operations  for the
three months and nine months ended  September 30, 1996 and 1995,  and cash flows
for the nine  months  ended  September  30,  1996  and  1995.  The  Notes to the
Consolidated Financial Statements which are contained in the Form 10-K should be
read   in   conjunction   with   these   consolidated    financial   statements.
--------------------------------------------------------------------------------


NOTE B - NOTE PAYABLE

In May, 1996 the Company  settled a disputed note payable to a stockholder.  The
Company paid the stockholder $73,000 cash and issued a new $123,000 note payable
in settlement of the $183,538 recorded payable balance.  A settlement expense of
$12,462  was  recorded.  The new  $123,000  note was  paid  upon the sale of the
building on July 3, 1996.
--------------------------------------------------------------------------------

<F3>
NOTE C - BUILDING SALE

On July 3, 1996 the Company sold the building which was the source of its rental
revenue.  The Company has a gain on sale of $122,042 in the third  quarter.  Net
rental revenues and expenses have been classified as discontinued  operations in
these financial statements.

The Company has leased space from the new owners of the building  through  July,
1998, for an average rate of $1,375 per month.
--------------------------------------------------------------------------------


NOTE D - FUTURE PLANS

The Company has no source of operating  revenues after the sale of the building.
Management plans to start a financial consulting and public relations firm under
the name Wall  Street  Investment  Corp.  The new  venture has no revenues as of
September 30, 1996.  Management is also exploring  various other future business
opportunities.

</FN>
</TABLE>
                                       7

<PAGE>
ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OR PLAN OF OPERATION (ITEM 303)

LIQUIDITY AND CAPITAL RESOURCES

Working capital at September 30, 1996, was $489,086, as compared to $402,057 and
$245,017 at  September  30,  1995,  and  December  31,  1995,  respectively.  As
indicated  in Note C of the  Notes to  Consolidated  Financial  Statements,  the
Company  sold its  rental  real  estate on July 3,  1996,  for a gain on sale of
$122,042.  This gain has resulted in the  increase in cash and working  capital.
Since the Company currently has no significant source of revenue,  the Company's
working capital will continue to be depleted by operating expenses. Furthermore,
if the Company should generate an operating loss for the current year comparable
to the loss incurred for the year ended December 31, 1995, a substantial portion
of the Company's remaining cash and working capital will be depleted.

Current  liabilities were $12,727 at September 30, 1996. The decrease in current
liabilities  was  primarily  due  to  the  payment  of  the  note  payable  to a
shareholder,  as indicated in Note B of the Notes to the Consolidated  Financial
Statements.

RESULTS OF OPERATIONS

Due to the sale of the  Company's  rental  real  estate,  the  Company no longer
receives  rental  revenues.  Rental  operations  are  reflected as  discontinued
operations in the statement of operations. The sale of the Company's rental real
estate  is  reflected  as a  gain  on  sale  of  building  on the  statement  of
operations. While the Company has continued to received income (and losses) from
Insurance residuals,  Interest and dividends,  and Investments,  these items are
not a significant source of income compared to the Company's operating expenses.

General  and  administrative  expenses  for the  three  and  nine  months  ended
September 30, 1996, include legal expenes of $23,552 and $61,645,  respectively,
which have been incurred in  connection  with the dispute over a note payable to
to a  shareholder,  as described in Note B of the  financial  statements,  and a
lawsuit with regard to a former subsidiary of the Company which was initiated in
October,  1995.  While the dispute over the note with the  shareholder  has been
resolved,  management of the Company  expects to incur a  significant  amount of
legal fees during the current fiscal year while the lawsuit is pending.

General  and  administrative  expenses  for the  three  and  nine  months  ended
September  30, 1996,  also include  salaries of $40,615 and  $121,615,  employee
benefits  expense of $5,594 and  $20,226,  and related  payroll tax  expenses of
$1,981 and $8,948,  respectively.  Also  included in general and  administrative
expenses  for the  three and and nine  months  ended  September  30,  1996,  are
Accounting  and  auditing  expenses  of $2,012 and  $16,572,  Entertainment  and
Development expenses of $3,973 and $18,464, respectively.

As compared to the nine months ended September 30, 1995,  operating expenses for
the current  period were 18.6%  higher.  The net loss for the nine months  ended
September 30, 1996, increased by 34.0%;  however, the periods are not comparable
due to the Gain on sale of building recorded during the current period,  and the
Extraordinary item recorded in 1995. The net loss from continuing operations for
the nine months  ended  September  30,  1996,  increased  by 27.8% from the same
period in 1995, generally, attributable to an increase in operating expenses.

The Company's present business operations do not generate sufficient revenues to
cover its  operating  expenses.  The Company,  through a  subsidiary  named Wall
Street Investment Corp., is attempting to start a financial  consulting company.
Whether  Wall Street  Investment  Corp.  will prove to be viable and a source of
revenue is unknown.

                                       8
<PAGE>



                           PART II - OTHER INFORMATION

ITEM 1.           LEGAL PROCEEDINGS (ITEM 103)

                  Not Applicable

ITEM 2.           CHANGES IN SECURITIES

                  Not Applicable

ITEM 3.           DEFAULTS UPON SENIOR SECURITIES

                  Not Applicable

ITEM 4.           SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

                  Not Applicable

ITEM 5.           OTHER INFORMATION

                  Not Applicable

ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K (ITEM 601)
                  A)       EXHIBITS
<TABLE>
<CAPTION>
           REGULATION S-B                                                                          CONSECUTIVE
              NUMBER                        EXHIBIT                                                PAGE NUMBER
                 <S>               <C>                                                                   <C>
                  2                 Plan of purchase, sale, reorganization
                                    arrangement, liquidation, succession                                  N/A
                  3(i)              Articles of Incorporation as Amended(1)                               N/A
                  3(ii)             Bylaws as Amended(2)                                                  N/A
                   4                        Instruments defining the rights of security
                                    holders, including indentures                                         N/A
                  10.1              Contract to Buy and Sell Real Estate for sale of
                                    7860 E. Berry Place.                                                  ____
                  10.2              Office Lease                                                          ____
                  11                Statement re computation of per share earnings(3)                     N/A
                  15                Letter on unaudited financial information(4)                          N/A
                  18                Letter on change in accounting principles                             N/A
                  19                Report furnished to security holders                                  N/A
                  22                Published report regarding matters submitted
                                    to vote of security holders                                           N/A
                  23                Consents of experts and counsel                                       N/A
                  24                Power of Attorney                                                     N/A
                  27                Financial Data Schedule                                               ____
</TABLE>
--------------------------------
(1)      Incorporated  by reference to the  Exhibits  previously  filed with the
         Company's Annual Report on Form 10-K for the fiscal year ended December
         31, 1990.
(2)      Incorporated  by reference to the  Exhibits  previously  filed with the
         Company's  Annual  Report  on Form 10- KSB for the  fiscal  year  ended
         December 31, 1994.
(3)      See Part I - Financial Statements.
(4)      See Part I - Financial Statements.

         B)       REPORTS ON FORM 8-K: NONE

                                       9
<PAGE>



                                   SIGNATURES

         In accordance with the requirements of the Exchange Act, the registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                        CAPITAL RESERVE CORPORATION
                                        (Registrant)

Date:November 13, 1996                   By:/s/Ralph W. Newton, Jr.
                                         Ralph W. Newton, Jr.
                                         Principal Financial and Accounting
                                         Officer and President

93096.10Q



                                       10